Island leaders on economic successes and challenges

Island leaders remain optimistic about the economy, citing an influx of new businesses and entrepreneurship, increases in gross domestic product and record-breaking tourism numbers. While Palau works to attract quality tourists and shortages of labor continue to plague Guam and the Northern Mariana Islands, the islands of Micronesia continue to look for opportunities for innovation and to expand key industries. Following are excerpts from the leaders’ state addresses, as prepared for Guam, the NMI and Palau.

Calvo

State of the Island Address

March 6 at the Guam Congress Building

“The good news is there are a lot of jobs — high-paying jobs — available. The problem is that job seekers don’t have the skills the employers need. A classic example is with the H2 and H1 foreign labor programs. The construction industry needs about 1,100 workers to do all the work that’s on hold right now. And this doesn’t even account for the work needed when the military buildup shifts into high gear. There are many other job openings in other career paths as well — nursing, accounting, farming, and teaching. We’re looking at bringing workers from Puerto Rico for the construction shortage, but that’s just a short-term and temporary solution.” …

“We’re organizing two fast-track programs for residents looking for work. The first is a construction boot camp for 100 people every program year. The Labor Department will run this program in partnership with construction companies that will promise to hire graduates from this boot camp. The second program is a six-month accelerated certificate program in construction trades that GCC will run with funding support from the labor agency. This will produce 300 ready-for-hire construction workers every six months.” …

“From 2011 to today, the tourism industry went from a single-market economic driver to a diversified industry with more jobs, more services, better facilities and record-breaking arrivals every year. If we keep up our strategy, adjust to the new travelers market and keep taking the risks that were needed to get this far — the next 10 years look even better. The trajectory shows 2.2 million visitors in 2027, with the Korea market vacationing here in numbers nearly overtaking Japan. Other major markets will include mainland China, Taiwan, the Philippines, Hong Kong, Russia and our own countrymen from the mainland. This growth is contingent on our ability to build not just hotels, but bed and breakfasts, timeshare and vacation rentals. And we should probably get used to more tourists taking extended vacations to live among us and enjoy our culture. And by the way, in order to support this many more tourists, we’re going to need another 10,000 people to fill these jobs.” …

“The largest global network of fiber optic cables transmitting almost all the telecommunication around this globe flows to Apra Harbor and out of it. [ …]While the ships account for our 90% import economy that throws our cash to the current, we have a hidden and untapped treasure, literally, among the refuse of sunken ships at the harbor. We’re not just talking about jobs. We’re talking about a cutting-edge industry that is 100% export-based, giving Guam a real shot at financial independence.

Technology also is going to change our infant agriculture industry, and it will also affect retailers, transportation and energy. If we look at the trajectory based on the current pace over the next 10 years, an industry of businessmen and farmers will cultivate produce vertically and begin replacing the supply of stateside imports.” …

“With the U.S. Coast Guard’s vigilance against foreign and illegal poaching in our waters — and hopefully with stronger sustainability efforts by the United States and her Asian allies fishing in our waters — [fishing] will be an industry that can replace current imports inside the next decade. […]

This confidence we have in our ingenuity and industry already is permeating a younger generation of entrepreneurs. The risks they are taking have ignited a competitive drive in farming, clothing, organic sundries, auto sales, restaurants, film production, the arts and the performing arts. [ …] This new crop of local business owners is invigorating sectors of our economy that always have been on the fringes but promise the most in the way of jobs and economic growth —design, local energy production and even sustainable manufacturing.”

Torres

State of the Commonwealth Address

March 31 at the Pedro P. Tenorio Multi-Purpose Center

“Our tourism numbers are strong. In 2016, for the first time in more than a decade we surpassed the 500,000 visitors mark. Our gross domestic product has risen by $86 million since [I took] office, and [it] is now calculated at $922 million — the highest it has been since 2009.” …

“Total employment has increased by more than 9% since Gov. [Eloy S.] Inos and I took office, and we can all be proud knowing that today we have more U.S.-eligible workers in our local labor force than at any time since 2004. … Wages for our workers have increased 54% since its lowest point in 2006.” …

“Since the beginning of this century, we have gone from 30% domestic workers in the labor force to nearly half of all workers.” …

“Together with our NMI legislature, we have increased total fund of [the Marianas Visitors Authority] in our last budget by $3 million, which is seeing tremendous results making our tourism industry resilient and strong.

We have developed and implemented a policy to revive the Japanese market and despite a global downturn of outbound tourists from Japan, the NMI has realized sustained growth and renewed excitement among the Japanese market.” …

“Our goal has been and will continue to be a diverse tourism sector that can withstand global trends, guided by the benchmark of 30% Japan, 30% Korea and 30% China.

Based on our efforts, our hotels are at nearly full capacity for the first time in years. We have new hotels in the works and have also seen the renovation of the beautiful Kensington Resort, and with each new hotel comes greater amenities for our tourists and jobs for our people.

As we increase visitor arrivals, we must continue to ensure that the benefits of the economy are fostering local entrepreneurship. I want to recognize the success of the NMI Micro Loan Program, which has provided $73,000 to entrepreneurs from Saipan and Tinian in 2016.” …

“Moreover, through a collaboration between the NMI Department of Commerce and [Commonwealth Development Authority], the NMI has been able to support the development of restaurants, safety gear distributors, uniform and medical supply retailers and entertainment providers through the U.S. Treasury’s State Small Business Credit Initiative Program and has deployed more than $8 million into the development of small businesses in our economy.

In fact, since coming into office, this [administration] has witnessed more than 1,500 new businesses open up shop to provide goods and services, offer new restaurant opportunities and accommodations for our tourists. In 2016, we saw a remarkable 36% increase in new business applications compared to 2013.” …

“This past year also showcased the viability and potential of our Casino Gaming industry.

To date the operations of Best Sunshine Live, the live-training facility on Saipan, has brought in over $72 million in [business gross revenue tax], excise and salary and wage tax revenue since beginning its operations in 2015.” …

“Certainly, one of the direst needs of the NMI under the CW program is the access to trained and qualified health care professionals and is one that is at the forefront of our discussions toward the passage of H.R. 3-3-9, which is now with the U.S. Senate.

If passed, H.R. 3-3-9 will allow for a momentary increase of the CW program’s numerical limitations this year to allow these vital personnel to continue providing the essential services our people need.”

Bordallo

Congressional Address

April 19 at the Guam Congress Building

“The nearly 100% denial rate of H-2B visas has slammed the breaks on progress at every level in our community and like a mad driver in rush hour traffic, believe me when I say I want to resolve this faster than anyone can imagine.” …

“Guam is exempted from the national H-2B visa caps because of the buildup, and I have communicated regularly with senior [Department of Defense] and [Department of Homeland Security] officials to seek a solution to reduce the number of application denials. Because the administration made it clear those changes to internal policy guidance would not be a viable option, I worked closely with the Navy and [U.S. Citizenship and Immigration Services] to develop language that we included in last year’s House defense bill. Unfortunately, because of the political sensitivities on issues relating to immigration, especially during last year’s election year, the Senate Judiciary Committee prevented the language from being included in the final bill. I have received a personal commitment from House Armed Services Committee Chairman [William McClellan] Mac Thornberry, who visited Guam late last year, to revisit this issue, and I will work with him and my colleagues on the Armed Services Committee to have it included in this year’s bill.” …

“Looking at the long-term, it is clear that this ordeal requires legislation that would grant our economy more flexibility in reaching a foreign workforce. This is a long-term goal because it would need to be part of any comprehensive immigration reform that may be revisited by Congress. As such, I will introduce legislation to carve out a unique immigration program for Guam, to provide a long-term solution to our labor needs. This bill will address the labor deficiencies that are affecting industries outside of the military, including civilian construction and maintenance, health care and hospitality.” …

“While Guam has seen record-setting visitor arrivals, I continue to be concerned by the long visitor wait times at the airport, which at times exceeds two hours. I am working with GVB, the airport administration, DHS and other stakeholders to find a solution to this problem. To address these long wait times, earlier this month, I reintroduced legislation that would establish an Electronic System for Travel Authorization, or ESTA, for the Guam-NMI Visa Waiver Program and direct that all revenues collected from this program will stay on Guam and the NMI for operations and staff at our ports of entry. The bill would transition the manual forms that foreign visitors are required to complete to an electronic system.” …

“I also hope that we will continue to expand our visitor outreach to attract visitors from new markets. I support efforts to expand our visa waiver program to include new countries like Vietnam, and I continue to encourage Gov. Calvo to use authorities Congress extended to him in 2009 to petition DHS to include emerging markets. … It is important that we move forward, together to make our case to the Trump Administration on the need to expand our visitor industry.” …

“Additionally, I continue my efforts to provide a federal cover over to Guam and other territories for the earned income tax credit. It was helpful that the Congressional task force for economic growth in Puerto Rico recommended a cover over in their report to Congress on Puerto Rico’s continued fiscal crisis, and there continues to be support by congressional leadership for extending any solutions for Puerto Rico to the other territories as well.” …

State of the Republic Address

April 13 before the 10th Olbiil Era Kelulau

Remengesau

“Palau’s economy, after a slight decline in fiscal 2013, has steadily grown through 2016. Despite a drop in tourist arrivals of approximately 22,000, Palau’s economy still grew in 2016 by 1.6%, driven by expanded construction activities and sustained consumer spending from wage increases.

The dramatic increase in overall tourism-related revenues reflected the greater number of tourist arrivals from mainland China that also resulted in a much lower average revenue per visitor arrival, which dropped by approximately 24% over those two years.

As we started to focus our efforts on high-value visitor markets to help ensure that our most critical industry is sustainable, our tourism numbers have decreased, but more importantly, revenue per arrival and visitor nights have increased by approximately 9% and 5%, respectively.

Perhaps the most important factor affecting visitor arrivals will be the strength of the U.S. dollar and its effect on the relative costs of other destination markets in our region. After a slowdown in fiscal 2013, government revenues bounced back, recording a 16% increase in fiscal 2014, a 7% increase in fiscal 2015 and just over 3.5% increase in fiscal 2016.” …

“Overall, Palauan labor has remained almost constant and foreign labor has increased by almost 38% over the past 10 years. Meanwhile, Palauan wages have increased by approximately 28% and foreign labor has increased by approximately 13.5% over the past 10 years. The wage gains and construction activities that drove growth in 2016 are expected to continue over the medium-term.” …

“Our overall tourism numbers are down from the expanded levels of 2015 and 2016. In fact, it looks like our tourism arrivals will further decrease by about 10% in 2017.” …

“We are already undertaking preliminary work on a new submarine fiber optic cable that will bring high-speed internet capacity to Palau within the next year at a concessionary loan cost from the Asian Development Bank of about $24 million. The submarine cable project is well under way, with several key milestones achieved already in 2017. …There is every indication that the project will be delivered on target, in December 2017, and within budget.” …

“Once in service, the Belau Submarine Cable Corp. will bring very significant reductions in the wholesale cost of broadband internet connectivity. High-speed internet is critical to Palau’s future social and economic well-being. Services in electronic education and electronic health are already being planned. BSCC’s capacity will be abundant, at a lower price and with more reliable delivery.

We look to our Palauan retail service providers to translate the opportunity that BSCC is bringing into real improvements in service quality at lower prices. This fiber optic cable will be augmented by infrastructure upgrades planned at an additional cost of $5 million. These upgrades will allow the current island cable system to receive the much improved signal from the new submarine cable.” …

“We also have a very long list of planned hotels, at a value of somewhere between $200 and $300 million, that have a Foreign Investment permit and/or an [Environmental Quality Protection Board] permit issued.” …

“Finally, we are working directly with the private sector to develop public-private partnerships that encourage investment in and further improvements to our basic infrastructure in a manner that promises significant benefits to both sides. To that end, we are in discussions with several prominent Japanese companies with support from the Japanese government for a major expansion and upgrade of the passenger terminal at the Palau International Airport.”